Business Notes INSIDER TRADING

For a while, it looked as if the steam had gone out of the much touted campaign by U.S. prosecutors against insider trading on Wall Street. Only last May, for example, the feds dropped charges against three investment-banking executives, though new indictments may be brought. But last week the campaign against wrongdoing in Manhattan's financial community took another step forward as Lawyer Israel Grossman, 34, was found guilty on 38 counts of mail and securities fraud related to insider trading. Grossman, who will be $ sentenced Sept. 15, faces a maximum of five years in jail and a $250,000 fine on each count.

Grossman's conviction came as a result of actions in July 1986, when he telephoned five relatives and a friend to tip them off to the pending financial restructuring of Colt Industries, the firearms and automotive-parts manufacturer. The six bought almost $34,000 worth of Colt options, an investment that netted nearly $1.5 million in profits when the project became public knowledge. The crimes were discovered during a Securities and Exchange Commission investigation of the unusually heavy trading in Colt prior to the refinancing announcement. Grossman will appeal last week's verdict.